In last week’s Equity Leaders Weekly, SIA identified the Drug Sector as an area of growing opportunity. From both market and sector perspectives, this group has remained on SIA’s watch list for several months as a relative strength gainer. While not yet among the top-performing sectors, several individual stocks have shown improvement in their respective SIA Matrix rankings. One such name is Johnson & Johnson (JNJ), which is the focus of today’s Daily Stock Report.
With a market capitalization of $450B, JNJ is one of the world’s most widely known drug companies. It is a constituent of the S&P 500 Index and currently ranks 161st out of 505 in the SIA S&P 500 Index Report, up 7 spots in the last month and 171 spots in the last quarter, indicating a steady build-up of strength. However, the shares are not yet in the favored zone, warranting continued monitoring for sustained momentum. JNJ has a beta of 0.45 and a 2.78% dividend yield, reflecting defensive characteristics that may be noteworthy should market volatility increase.
Examining the Candlestick Chart of JNJ, the shares have largely traded sideways from 2022 to 2025, with the high $160’s marking the top of the trading band and $135 the bottom. Notably, in July of this year, the 3-year trading range broke to the upside, and a new uptrend has since emerged with higher highs and higher lows materialising and remaining intact today. This represents a significant breakout after a prolonged sideways pattern, suggesting the bears have been washed out and the bulls have taken control. The shares peaked around the mid-$195 area and have since paused, though no chart damage has occurred to date. Upcoming support appears to be just under the $180 area, which would mark an early sign of weakness should that level fail to hold. Only time will tell if JNJ can maintain its footing there.
Looking at the longer-term Point and Figure chart on a 2% scale for an investment-grade analysis and to identify more precise support and resistance levels, we observe that the shares were in a strong, steady 10-year uptrend spanning 2012 to 2022. Following this secular bull run, the shares entered a 3-year consolidation phase from 2022 to 2025. July 2025 appears to have marked the end of this consolidation as the shares broke above the $169.25 price point, confirming a renewed uptrend.
The stock is presently in a rising column of X’s lasting 14 boxes without a 3-box reversal to date. Should the uptrend continue, next resistance lies at the psychological $200.00 level, followed by $206.32 based on a measured move. Given the magnitude of the recent advance, a pullback is possible, with support at the 3-box reversal level of $176.09, and below that at $165.93, which represents prior resistance in accordance with the polarity principle. Impressively, the shares are displaying a bullish Spread Triple Top Pattern and hold a positive SMAX score of 9 out of 10, reflecting strong relative strength across all asset classes, not only within their peer group in the S&P 500.
Johnson & Johnson is the world’s largest and most diversified healthcare firm. It comprises three divisions: pharmaceutical, medical devices and diagnostics, and consumer. The drug and device groups account for close to 80% of total sales and generate the majority of the firm’s cash flow. The drug division focuses on the following therapeutic areas: immunology, oncology, neurology, pulmonary, cardiology, and metabolic diseases. The device segment covers orthopaedics, surgical tools, vision care, and a few smaller categories. The consumer segment encompasses baby care, beauty, oral care, over-the-counter medicines, and women’s health. Geographically, just over half of total sales are derived from the United States.
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